 |
Many studies attempted to measure the degree of financialization of an economy, generally on a country by country basis, given the heterogeneity of measures and data availability. In this paper, we provide a simple but common measure of financialization of NFCs, namely, the participation of services provided by the financial sector (both directly and indirectly) on their value-added creation process, inspired by Dávila-Fernández and Punzo (2018) methodology. In order to do this, we use inter-country input-output (ICIO) matrices developed by the OECD, which allows us to understand which role plays the financial sector (local or foreign) in the “value-added production function” of NFCs from 34 industries in 64 countries for the period 1995-2011.
We find three main stylized facts. First, the financial sector plays a relevant role in the value-added creation process of NFCs, and its importance has increased during the last years, although there is high diversity among countries. Second, this process has been heterogeneous when different productive sectors are considered. Primary industries evidenced a low degree of financialization, while manufacturing and the service sector generally presented a higher reliance on finance. Third, between 1995 and 2008, non-financial firms sharply increased their dependence on foreign financial value-added. Moreover, the origin of these exports of financial services changed in the analysed period: while some traditional financial hubs such as the UK, Switzerland and Japan decreased their importance as providers of financial value-added to NFCs, China, Russia and India became important global players.
